Monday, September 3, 2007

Fed Retreat Has Negative Tone

From Bloomberg:

Federal Reserve Chairman Ben S. Bernanke's pledge to stop the credit-market rout from wrecking the economy failed to quell concern at the Fed's Wyoming summer retreat that the U.S. is heading for recession.

``I came to Jackson Hole thinking there would be no recession, but I'm leaving thinking we could well have one,'' said Susan Wachter, a professor at the University of Pennsylvania's Wharton School, who co-wrote the first academic paper presented at the conference.

``There are no optimists in the crowd here,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York and a former head of domestic research at the New York Fed. ``There's a pretty strong consensus that this has gotten a lot more serious.''

My guess is Ben is getting an earful about what he should have done rather than what he has done. As to whether or not he will listen is a different story. In addition, there is no guarantee all of the negativity is correct. Remember, the market has been tainted by 18 years of "easy Al, and his liquidity flooding band". In other words, people are use to rate cuts whenever there is a problem in the market.